Hartford Financial Services Group Inc., the insurer that sold life units, said the company will buy back shares and reduce debt after posting a fourth-quarter loss on claims from superstorm Sandy.
Hartford will buy back as much as $500 million in stock and cut debt by $1 billion according to a statement Monday from Hartford, which is based in the Connecticut city of the same name. The net loss of $46 million, or 13 cents a share, compared with profit of $118 million, or 23 cents, a year earlier, Hartford said in a statement.
Chief Executive Officer Liam McGee, 58, is focusing on home, auto and commercial coverage as he narrows the focus of the firm. He has divested assets including Hartford’s life insurance, retirement plans, broker-dealer and individual-annuities origination units in deals that freed up more than $2 billion in capital.
The sales help with “critical goals for the Hartford, including paying down debt, returning capital to shareholders and further strengthening our financial flexibility to take actions to reduce risk in the legacy annuity liabilities,” McGee said in the statement.
Hartford said it won approval from state regulators to pay a $1.2 billion dividend from Connecticut life insurance units to the parent company. The insurer advanced 1.5 percent to $25.07 at 4:41 p.m. in New York. The firm gained about 28 percent in the past year.
A year ago, billionaire hedge fund manager John Paulson told McGee on Hartford’s earnings call to “do something drastic” to improve the company’s share price. Paulson, Hartford’s largest shareholder at the time, urged the CEO to split the firm into property-casualty and life insurance.
McGee is working to reduce risks tied to variable annuities as low interest rates and stock-market volatility have pressured results from the retirement products. Hartford said in November it would offer to pay some clients to give up the contracts.
“The major management actions taken to simplify the business model around a market-leading P&C franchise and away from capital-market sensitive businesses should result in consistent operating results,” Goldman Sachs Group Inc. analysts led by Christopher Giovanni said in a Jan. 15 research note referring to property-and-casualty coverage. They recommended investors buy the shares.
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